📉 Buying the Dip
The price dip signal fires when an insider buys company stock after a significant drawdown from recent highs — typically 10% or more. An executive choosing to increase their personal exposure to their own company precisely when the market is selling it suggests a sharp disagreement with the market's negative assessment.
Live insider transactions with this signal active across 13 European markets.
How it works
Lakonishok and Lee (2001) found that insider purchases are significantly more informative when they occur after price declines, as insiders are effectively expressing a contrarian view against the market consensus. The signal is particularly strong for CEOs and CFOs, who have the deepest understanding of the company's fundamental trajectory. When an insider buys on weakness rather than strength, they are not simply riding momentum — they are expressing conviction that the decline is unjustified. This is the insider equivalent of a value investor buying a falling knife, but with an information edge the external investor cannot replicate.
Detection methodology
InsidersAlpha calculates the stock's percentage decline from its rolling 60-day high at the time of the transaction using Yahoo Finance price data. If the transaction price is more than 10% below the 60-day high, the price dip flag is applied. The threshold is conservative by design to avoid noise from normal price fluctuations.
Frequently asked questions
What percentage decline triggers the price dip signal?
InsidersAlpha uses a 10% decline from the 60-day high as the threshold. This captures meaningful drawdowns while filtering out routine intraday or weekly fluctuations. The exact drawdown percentage at time of purchase is shown on each transaction card.
Why is buying on weakness more significant than buying at highs?
Buying at an all-time high could reflect routine share plan purchases, compensation-linked buying, or simply following momentum. Buying during a drawdown requires the insider to actively resist market sentiment and commit their personal capital to a contrarian thesis. The decision is more deliberate and therefore more informative.
Does this signal combine with other signals?
Yes — the most powerful scenario is when the price dip signal co-occurs with cluster buying (multiple insiders buying on the same dip) or repetitive buying (one insider accumulating during the drawdown). InsidersAlpha shows all active signals simultaneously on each transaction.
Are there cases where this signal is misleading?
Yes. If a stock is declining because of fundamental deterioration (earnings misses, debt distress, sector headwinds), insider buying may reflect loyalty or anchoring bias rather than genuine information advantage. Always review the reason for the decline alongside the signal.
Other insider signals
InsidersAlpha tracks five distinct insider trading signals. They can fire independently or in combination — co-occurrence of multiple signals on the same transaction is associated with higher conviction.
See our methodology page for a full explanation of how all signals are calculated.